Auto case

THE FUTURE OF MANUFACTURING IN EUROPE 2015-2020:
THE CHALLENGE FOR SUSTAINABILITY

Case Study: Automotive Industry –
Personal Cars

INTEGRATION OF RESULTS FOR SELECTED KEY
SECTORS

Jürgen Wengel, Philine Warnke
Fraunhofer Institute for Systems and Innovation Research, Karlsruhe
Josefina Lindbom
JRC-IPTS, Sevilla

Karlsruhe, February 2003

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Content
Page

1 Overview and Methodology.............................................................................. 1

2 The Automotive Industry in Europe................................................................ 2

2.1 Industry Structure ............................................................................. 2

2.2 Trade................................................................................................. 3

2.3 Changes in Market Structure ............................................................ 3

3 Socio-economic Trends ..................................................................................... 5

3.1 Conclusions from Developments of Industry Structure ................... 5

3.2 Socio-economic Trends Derived from the Interviews...................... 6

4 Technology Trends in Automotive Manufacturing........................................ 8

4.1 Changes in Manufacturing Driven by Changes in Concepts
for Personal Cars .............................................................................. 8
4.1.1 Multi-material Processing................................................................. 8
4.1.2 Processing of Lightweight Materials .............................................. 10
4.1.3 Possible Adoption of Nanotechnologies......................................... 16
4.1.4 Manufacturing and Emerging New Concepts in the Power
Train................................................................................................ 17
4.1.5 Manufacturing and Electronics in Personal Cars ........................... 20

4.2 Technological Developments Driven by Demand on
Flexibility and Speed ...................................................................... 22
4.2.1 Processes......................................................................................... 23
4.2.2 ICT Technologies in Manufacturing .............................................. 24
4.2.3 Diffusion of Existing Technologies................................................ 25

4.3 Skills and Competencies................................................................. 26

4.4 Summary: Technological Items for the Research and
Policy Agenda................................................................................. 28

FutMan Project: Case Sector Report Automotive Industry/Personal Cars

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5 Production Strategies ...................................................................................... 31

5.1 Restructuring the Value Chain: Options for Different
Actors.............................................................................................. 32

5.2 Flexibility and Customisation: New Techno-organisational
Concepts in the Automotive Industry............................................. 34

5.3 E-commerce, globalisation and regional cluster............................. 37

5.4 Options for OEMs to Handle Electronics Production .................... 38

5.5 Personnel Development .................................................................. 40

6 Sustainability Issues in Future Automotive Manufacturing ....................... 42

6.1 Current Environmental Issues in Car Manufacturing..................... 42
6.1.1 Relevant Legislation ....................................................................... 43
6.1.2 Recycling and Re-Manufacturing................................................... 45
6.1.3 Volatile Organic Compounds ......................................................... 47
6.1.4 ICT Enabling Reduction of Environmental Impact........................ 48
6.1.5 Life Cycle Assessment ................................................................... 49

6.2 Possible Disruptions – Demands on Manufacturing Arising
From New Concepts of Mobility.................................................... 50

6.3 Environmental Impact – Some Possible Trajectories of
Automotive Manufacturing ............................................................ 51

6.4 Social Sustainability Aspects.......................................................... 53

7 Governance of Manufacturing: Experiences from Automotive
Industry ............................................................................................................ 54

8 Conclusions and Policy Implications: Challenges for Competitive
and Sustainable Manufacturing of Personal Cars in Europe ..................... 57

8.1 Competitive challenges................................................................... 57

8.2 Sustainability Issues in Future Car Production............................... 60

9 References......................................................................................................... 63


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1 Overview and Methodology

The aim of the case studies in the FutMan project is to integrate and focus the re-
sults from the analysis of the three projects strands (i.e. materials, transformation
processes and industrial organisation) for key sectors of manufacturing in Europe.
This case study is dealing with the automotive industry concentrating on the manu-
facturing of personal cars. To get a picture of the current trends and expected future
developments in the automotive industry, a variety of literature sources was evalu-
ated. To underpin the results and to introduce different perspectives, interviews with
experts from the sectors were carried out by the FutMan project consortium. The
interview partners in the automotive sector were European experts working at dif-
ferent stages in the value chain. Approximately 20 of the experts interviewed were
directly involved into manufacturing of personal cars. Some others could provide
insights into the automotive sector from other perspectives (e.g. automation or in-
strumentation). The results of these interviews constitute an important part of this
case study.

This report is proceeding as follows. In section 2 some basic information about the
structure of the European automotive industry is given. Ongoing changes in the
organisation of the manufacturing of personal cars are described. In section 3 socio-
economic developments that are driving this sector are identified. Section 4 dis-
cusses the main technological trends that are emerging in the manufacturing of per-
sonal cars at the moment. As manufacturing is heavily depending on the character-
istics of the cars that will be produced in the future, this section is organised along
specific technological features like materials, power-train concepts and electronic
devices. Another strand of developments is associated with the growing demand on
flexibility in manufacturing. In section 5 the focus is on organisational strategies
that are adopted in the automotive industry to cope with the demands of globalised
markets. Section 6 is dealing with sustainability issues. As the FutMan project is
explicitly aiming at „maintaining a competitive and sustainable manufacturing sys-
tem“ in Europe the challenges raised by sustainability are given special emphasis.
Therefore current and future environmental concerns raised in manufacturing of
personal cars, aspects of social sustainability and competitiveness are discussed. In
section 7, the results from the research on governance in the framework of the Fut-
Man project are evaluated in respect to car manufacturing. The influence of legisla-
tion on the strategies of relevant actors from the automotive sector is analysed. Fi-
nally, section 8 summarises the main conclusions and implications for technology
policy, especially with regard to FP6.


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2 The Automotive Industry in Europe

2.1 Industry Structure

The transport equipment sector is the largest sector in the manufacturing industry
and within this sector, the manufacture of motor vehicles including their parts,
components and equipment is by far the biggest, resulting alone in over 10% of EU
total manufacturing value. Furthermore, the production of transport equipment is
also of major importance to upstream activities, most notably metal processing,
rubber, plastics, electronics, textiles and engineering.

The importance of the automotive industry for the Western European market is in-
disputable. In 2000, one third of the global production of cars was produced in
Western Europe (i.e. 20 million passenger cars). In 1995, it was by far the industry
sector in the EU with the highest number of people employed: 1.2 million persons
work in manufacturing and assembling of motor vehicles and over half a million
work in manufacturing of parts for motor vehicles. Adding up the jobs that are indi-
rectly related to the industry, automobile manufacturers employ over 12 million EU
citizens.

It is an industry that closely follows the general business activity even though a se-
vere downturn in the early 1990s shows how the recession affected the production
of cars even more than the total manufacturing in Western Europe. During this time
period, the manufacturing of cars declined while the production of parts and acces-
sories experienced a strong growth. During the latter part of the 90s, a general rapid
expansion in production took place as consumer demand recovered, and in 1997,
production value totalled over 370 billion euros.

According to OECD estimates, the total number of vehicles in OECD countries is
expected to grow by 32 % from 1997 to 2020 and, on a global scale, with 74 % in
the same time period. The European Commission estimates in its White Paper
“European Transport Policy for 2010: Time to decide” that the demand for the
transport of goods within the EU will increase with 38 %, and the demand for pas-
senger transport by 24 % between 1998 and 2010.

The activities are spread out over most Member States but for both sub sectors,
motor vehicles as well as parts and accessories, Germany is the largest producer
with about 40 % of the production respectively. The industry is also particularly
important in the Swedish, French, Italian, Spanish and UK economies. The manu-


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facturing of motor vehicles is largely done in very big companies (the world’s three
largest companies in 1998 were all car manufacturers). In the EU, Volkswagen,
Ford (Volvo), PSA Peugeot Citroen, General Motors and Renault are the biggest
players in the manufacturing of passenger cars.

In comparison with the main international actors, the USA and Japan, the patterns
differ between the two sub sectors. For the production of motor vehicles, the EU
was the leading producer in the Triad accounting for 42 % in 1995 while the USA
produced one third and Japan the remaining quarter. The situation is reversed for
parts and accessories where Japan represents half of the production and the USA
and the EU produce one quarter each.

2.2 Trade

The industry is an important positive contributor to the EU trade balance. In 1999,
the trade balance surplus exceeded 30 bn euros. The single most important exporter
to the EU is still Japan, even though there has been a slight decrease since the 80s.
The USA sells a substantial share of parts and accessories to the EU but the U.S.
share of motor vehicles market in Europe is relatively low. For both sectors, several
Eastern European countries have become increasingly important and Hungary, the
Czech Republic and Poland together have a share of over 20 % of the EU import.
The main destination for EU exports is the USA, accounting for more than a quarter
of the export of parts and accessories and as much as almost 40 % of motor vehi-
cles. Just as for imports, several Eastern European countries have grown in impor-
tance as trade partners but also Brazil and Mexico have increased their share. Japan
and Switzerland keep being important export destinations for motor vehicles.

2.3 Changes in Market Structure

A number of manufacturers dominate on the European level. When looking at indi-
vidual Member State markets, these are often dominated by domestic manufactur-
ers. These tend to have larger distribution infrastructure in their respective domestic
markets and the customers’ preference for cars produced within the country still
plays an important role. The need to reduce this dependency on domestic markets
and to improve the competitiveness on markets elsewhere is of utmost importance.
This is continuously being done, by investing in transplant production facilities and
by joint ventures. There has been a reduction in the number of independent manu-
facturers, as niche producers have been acquired by high-volume manufacturers. In
the late 1990s the leading firms grow significantly through mergers and acquisitions
rather than by internal growth. Consolidation between the world’s largest vehicle


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manufacturers is a fact and one example is Daimler-Benz (D) and Chrysler (USA).
As costs continue to increase, partnerships and alliances are providing a cost-
effective method to develop a competitive selection and to reduce dependence on
domestic markets.

Investments made by EU manufacturers abroad rose and were close to 40 billion
euros in 1998. Again, Germany is the most active country, carrying out almost 75 %
of the EU investment abroad. At the same time, and especially during the beginning
of the last decade, there was a high degree of investment by south-east Asian pro-
ducers in Europe, often justified as being in anticipation of the creation of the single
market.

The globalisation process has greatly affected the sector and has resulted in leading
manufacturers setting up transplants and negotiating alliances throughout the world.
This has often lead to the development of transport specific geographical clusters.

With an almost saturated demand in mature markets, attention is turned to countries
like China, Malaysia, Indonesia and India in search of new customers. The densely
populated countries of south-east Asia are considered as one of the key markets in
the future with increasing mobility requirements and growing prosperity.


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3 Socio-economic Trends

3.1 Conclusions from Developments of Industry Structure

In the preceding sections, the European automotive industry was presented in gen-
eral terms. It has been shown that the organisation of production processes in the
automotive industry is subject to severe restructuring.

The important overall directions were clearly outlined: Concentration of OEMs and
suppliers, further internationalisation of manufacturing, shift of competencies be-
tween OEMs and suppliers and further pyramidisation of the demand chain. Nev-
ertheless it is by no means clear how the new structures will exactly look like. Many
actors are still struggling to position themselves in the new organisation of the
value-chain and there are distinctively different strategies for dealing with the chal-
lenges of this re-organisation. For European R&D policy it is of importance to
know the different options and to evaluate the effects on the competitiveness of
European manufacturing but also their relation to changing demand patterns.

The following questions regarding socio-economic trends are considered to be of
importance in respect to the objectives of the FutMan project and will therefore be
further investigated in the course of this report:
• What does the tiering of the supply chain mean for companies on different posi-
tions in the value chain? Which options are there especially for SMEs to position
themselves?
• What new forms of co-operation are arising? What are the implications of these
forms for competitiveness and sustainability?
• Are there ways to meet the internationalisation of manufacturing for globalised
markets that are more compatible with the aims of sustainable manufacturing
than others?
• How do different technological options (e.g. ICT technologies, manufacturing
processes) relate to organisational change? Are there enabling technologies for
more sustainable solutions? Do desirable solutions for the organisation of work
require technical developments?
• What are the demands on skills and competencies arising from the organisational
and technological changes that are expected?
• Is the car industry setting or at least influencing socio-economic trends and how?


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• How are the relations between global car manufacturers especially in Europe, US
and Japan influencing the developments? What does it mean that instead of sim-
ple competition there is a complex network of interaction being daily re-shaped
by joint ventures, transplants, mergers and changes in capital structure?
• Is the diversity and fragmentation of European car manufacturing working as a
strength or a weakness?

3.2 Socio-economic Trends Derived from the Interviews

Much has been said about socio-economic drivers in the strand reports and the sce-
nario workshops which applies to automotive industry just the same as to industry
in general. Nevertheless there are some issues taking a special meaning in the auto-
motive sector. In the following paragraphs some items that were mentioned as rele-
vant drivers for their industry by the interviewees are listed.

Increasing individualisation is driving the need for customised cars with a multi-
tude of special features.1 Several experts from the automotive sector think that cus-
tomers will be ordering their individual car to be manufactured in 2020.

In addition to this, changing values are perceived to influence several different
lines of developments like increasing safety demand.

“The overall attitude in society with respect to technology is determining product concepts in per-
sonal cars (e.g. technology as toy or "hidden" technology). Especially ideas about replacing tasks of
the human drivers by technical control systems (up to automatic guiding systems) are dependent on
the direction the public opinion is taking. There seems to be a latent conflict between freedom and
safety and it is still unclear in which direction concepts of personal cars are heading. Current trends
are conflicting.” (electronic system supplier)

The ageing of population in Europe means that bigger shares of drivers will have
special needs e.g. in respect to comfort, support of eyesight etc.. This will effect
several new features in personal cars.

Lack of young workforce in Europe is perceived differently. Automotive manu-
facturers are often very attractive to workers because of the high wages so the ma-
jority of the companies is not worrying about lack of workforce very much. How-
ever, some experts were concerned with the issue and there is a general fear that
European workforce will not be skilled enough in the future when education funds
are reduced.

1 cf. (Sun Microsystems Inc., 2000, p.7 ff.)


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“It is also important to make the best use of different ages and combine the right teams and let them
learn from each other. Generally, older workers have a lot of experience and practical knowledge
while the younger ones have more theoretical knowledge and are faster”(modules supplier)

“In the future it will be a challenge to make the work place attractive and attract and keep the right
people.” (contract manufacturer)

Resources: It is obvious that oil resources are of special concern for the automotive
industry. The anticipation of future scarcity of conventional fuels is a major driver
for several technological developments that were described in section 4. Above this
there seems to be no specific lack of resources. Though the companies are trying
not to become dependent on one special material. Prices of material resources (e.g.
magnesium) are observed closely.

Environmental legislation clearly is one of the major drivers of developments in
the automotive sector. This holds especially for the take-back regulations and emis-
sions standards. But several other regulatory measures are important as well (see
section 6.1.1)

Globalised production is a fact in the automotive sector. Nevertheless the demand
for global production is still driving new developments (see section 4.2).

“Environmental awareness has increased but is now no major driver for technological development
because it does not influence the decision to purchase cars. This is because slight differences in
environmental friendliness are not perceived by the majority of customers. The willingness to spend
extra money is mainly dependent on useful extra functions.” (electronic system supplier)


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4 Technology Trends in Automotive Manufacturing

“The main problem of the whole automotive sector is the lack of willingness or ability for real inno-
vation. R&D is invested mainly in improvement of existing solutions instead of radically new con-
cepts.” (electronic systems supplier)

In the strand report „transformation processes“ it was concluded that manufacturing
is almost entirely reactive to developments in other areas instead of developing on
its own line to a considerable extent as well. Particularly, manufacturing is driven
by product trends on the one hand, especially new materials, and by demands from
globalised markets like flexibility and increasing competition on the other hand.

Both drivers are simultaneously shaping the development and adoption of manu-
facturing technologies. This is especially true for automotive manufacturing where
several new product trends are arising at the moment and which is far ahead in the
internationalisation of production. For analytical purposes we will first discuss
technological trends driven by new features of personal cars. Afterwards (4.2) we
will outline which technological trends in manufacturing are expected to arise as a
reaction on the rising demands on flexibility and speed.

“80% of new developments originate from the automotive sector, thus this will be the driving force
in the future” (materials and mechatronics expert from applied research unit)

The automotive industry is a prime sector in driving new technological develop-
ments. Because of its high R&D expenses, this industry is determining the direc-
tions of research in several areas. Accordingly, many of the technological develop-
ments that were outlined in the strand reports as well as discrete transformation pro-
cesses are driven by the needs of the automotive industry or at least relevant for
automotive applications.

4.1 Changes in Manufacturing Driven by Changes in Con-
cepts for Personal Cars

4.1.1 Multi-material Processing

The adoption of new materials in cars is a very important driver for the develop-
ment and implementation of new manufacturing technologies in the automotive


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industry. This was stated by several of the experts as well as in the automotive
group of the FutMan Scenario workshops.

The variety of materials used in automotive design is steadily increasing and there
is a clear trend to use specific materials for specific purposes (multi-material de-
sign). Though the quantitative division between advanced and classical materials
depends on the background described for the trajectories of materials development
outlined in the materials strand report by CMI2, it becomes clear that hybrid materi-
als and composites will increasingly be used in any of the trajectories. Another
trend mentioned in the interviews and in the environmental reports of car manufac-
turers (though of minor importance in R&D expenditure) is the use of biodegrad-
able materials to be used for interior parts.

Though the trend to multi-material design or material-mix seems to be universally
acknowledged and is expected to be increasing, it is by no means clear which mate-
rials will be the “winners” of this process. Instead it is obvious that there is severe
competition between different kinds of materials to be used in cars especially in
light weight construction (see 4.1.2). Associated with the current competition are
powerful associations of material providers from different regions of the world.

“By the way, the steel industry and its aluminium counterparts are not co-operating but fight each
other.” (manufacturer of aluminium parts of the car)

As each type of material is connected with specific demands on manufacturing pro-
cesses, it is clear that competition between future materials will be accompanied by
competition between manufacturing processes. In general there is a very strong
need for processes that can be adapted to the needs of different materials and for
machines that can be programmed or configured to perform different processes.

In addition, there will be an increasing need for new ways of joining different mate-
rials. Accordingly, adhesives are expected to gain in importance in car manufactur-
ing. For example, in the BMW 7 there is an increase of glue line from 8 to 150 me-
ters from one model to the next.3 Newly developed adhesives that are resistant
against oil are allowing the increasing use of this technology in car manufacturing.4
In addition to its suitability for multi-material design, adhesion is reducing weight
and increasing stiffness. Especially photo-bondings (adhesives hardening under
light) seem to be of growing interest.5

2 cf. strand report materials prepared by CMI
3 cf. materials strand report by CMI and ( 2002d)
4 Nevertheless the contact with oil from other processes has to be very limited. Another problem is
warming of adhesives through welding of neighbouring parts. (e.g. 2002c)
5 cf. ( 2002f)


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Other promising joining technologies for different materials in cars like collar join-
ing6 and different variants of snap fastening are arising. These processes are non-
thermal, do not need any lubrication and can be combined with adhesives. Also
coated materials can be joined.

As was pointed out in the materials strand report, the need for specific materials for
specific functions will lead to an increasing integration of materials design into the
design of manufacturing processes. Costs will be reduced by adapting processes
especially designed for specific materials (see materials report prepared by CMI).
There will be a simultaneous optimising of product, process and material properties.
In this optimisation, modelling and simulation will play a very important role. A
number of experts named the improvement of the interface between production,
process and material properties via simulation as a prime research issue in order to
enhance competitiveness of European car manufacturing.

“adhesion means application of additional material between components. This is problematic for
material quality as well as for environmental reasons. Therefore (laser)welding of plastics is the
better solution” (manufacturer of machine tools for laser welding)

From a recycling point of view, multi-material design is highly problematic. The
more different materials are being used in a product, the more difficult and expen-
sive are the re-manufacturing and recycling processes. Neither is it clear how dif-
ferent new joining technologies relate to recycling demands. Nevertheless, recy-
cling can be enabled by some measures like labelling the materials used and consid-
eration of re-manufacturing at the development of new joining methods. For exam-
ple, some adhesives are loosening when heated and this enables easy recycling. This
aspect should be stressed in any research support measure. Accordingly, joining
technologies for new materials with a view to recycling ability were also considered
as one of the two most important cross cutting issues for research priorities by the
automotive group at the scenario workshop.

4.1.2 Processing of Lightweight Materials

In order to reduce the fuel consumption, designers in the automotive industry are
aiming at reducing the weight of cars as far as possible. By 2020, the weight of a
car is expected to be reduced by 17% (250 kg).7 Accordingly, weight reduction is

6 Mechanical process where a collar is produced in a sheet metal by pressing a punching tool
through it. The plastic component can then be joined to the metal sheet by simple pressing
(similar to clinch technology)
7 cf. (Mercer und HypoVereinsbank, 2001b)


11

one of the main drivers of material selection in automotive industry. The following
developments are generally expected8:
• Body-Exterior: use of aluminium, magnesium and plastics in the very near future
• Body-Structure: metal foams (2003), steel/aluminium-space-frame (2004),
sandwich-structure (2005), composites (2006), plastics (2015).

However, especially with respect to the body structure, it is by no means clear to
what extent these advanced solutions will be applied. Some of these technologies
might be confined to niche-cars and there are experts who reckon that the conven-
tional steel frame will stay on the market for quite some time. When manufacturers
have decided for a certain materials concept for car bodies, they are likely to stay
with it for quite some time instead of switching to the next trend.

The scenario automotive group expects a general increase in the use of aluminium
and magnesium. Additionally, the emergence of other lightweight materials is ex-
pected in case the political background is characterised by a high degree of con-
certed policy.

“As of 2007 and onwards, coated and completely coloured plastics (fully recyclable) will have a
breakthrough in personal cars ... This will need completely new competencies from designers.”
(automotive OEM)

Magnesium
While magnesium is considered to have increasing importance but is confined in its
use for niche applications, aluminium is widely expected to be of growing impor-
tance in all areas of car manufacturing.9 However, some studies are expecting a rise
of average magnesium share in a car from the current ca 2.3 kg up to 113 kg.10
There are advantages with magnesium such as the low weight (one third of the
weight of aluminium), but also disadvantages such as high costs and safety prob-
lems in processing the material. Nevertheless, prices are expected to fall from
around 2010 due to expanded use of resources in China.

“The introduction of magnesium-alloys will require completely new production technologies, for
example, magnesium can not be formed easily”(Materials and Mechatronics expert from research
unit)

8 cf. (Mercer und HypoVereinsbank, 2001a, p. 7 ff.)
9 For detailed information on different alloys cf. CMI strand report on materials
10 These figure were obtained for Ford. Cf. e.g. ( 2002i)


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Aluminium
As the first car manufacturer, Audi started with mass manufacturing of aluminium
bodies for the A2 in 2000.

Examples for advanced aluminium applications in cars:
components processes
Door: die casting, extrusion, press
Range Rover, Opel Omega joining: mix from adhesion, welding,
riveting, screwing11
Audi A3 laser-welding
Motor parts sintering
Full body:
Audi A8, A2 hydroforming, laser welding

The use of aluminium depends very much on the development of adequate proc-
essing technologies. High investments are necessary to switch to a new material in
car manufacturing. For example, it is reckoned that Audi planned for five years and
invested more than 150 million Euros for their new aluminium manufacturing
site.12

“The aluminium car industry today would gain very much in competitiveness if the extrusion tech-
nology could be developed further and there are many aluminium automotive industries in Europe”
(aluminium parts supplier)

For aluminium, the main processes being currently under investigation are: laser
processing (detailed discussion see below), extrusion processes (see material strand
report by CMI), hydroforming13, flow-forming (a kind of rolling which is done
immediately after casting)14, compact-spraying (a powder-metallurgy process),
foaming and sintering.

From the environmental point of view, there are two aspects to be considered with
respect to aluminium. On the one hand, it needs a high amount of primary energy
for its production. On the other hand, it can be reused at a high energy level which
gives it an advantage over plastics in recycling (magnesium has roughly the same
advantage). Overall, with increasing taxes on energy use, aluminium is becoming a
more expensive material.

11 cf. ( 2002a)
12 cf. ( 2001)
13 A process where tubes are formed into very complex structures by extremely high pressure. This
process is also interesting because it reduces process steps and parts needed.
14 cf. VDI nachrichten 2002h


13

“Extrusion of aluminium can be used in many areas where steel on the contrary needs to be welded
together. Accordingly, aluminium profiles can have varying/floating thickness which is a clear
benefit.” (aluminium parts supplier)

“There is still a growing demand for low fuel vehicles in combination with recyclable materials.
Thermoplastics are light, strong and in this aspect good for automobiles but they can not be recy-
cled. That is where aluminium comes in. It weighs a third of steel and even though thicker parts are
needed than for steel, the total weight is much less.”(company producing aluminium chassis)

Steel
Some interview partners pointed out that the variety of steel offered is steadily in-
creasing which means that there is also a high potential for light weight steel appli-
cations in the automotive sector. In particular, highly compact steel products are
competing with aluminium. Because of their high strength, their use is also inducing
important weight reductions.15 In addition, steel is cheaper than many other materi-
als and easy to recycle. The steel industry has started a special initiative to develop
steel light weight concepts for cars and promote it to the automotive industry
(ULSAC – Ultra light steel auto closures).

Plastics
There is a heavy competition between plastics, composites and light metals to be
used for several purposes in personal cars. Several car manufacturers have started to
use plastics for parts of the body.

There is particularly one possible usage of plastics, which could lead to a disruptive
change for automotive manufacturing. If plastics can be coated and coloured “from
the beginning”, paint-shops that today account for a substantial part of the automo-
tive manufacturing process might vanish.

Nevertheless, the use of plastics raises several questions with respect to recycling.
To make re-use possible, it is important to use only a limited number of plastics and
to label the components (see also section 6.1.2).

“Use of plastics will mean a complete restructuring of manufacturing. Issues like clean room
manufacturing will arise. New joining technologies will be needed. Plank concepts will have to be
adapted. Automation will be much higher.” (OEM manufacturing planner)

15 cf. 2002e and 2002g


14

Other materials
Hybrid materials like foamed metals are also expected to gain importance but com-
posites and hybrid materials are generally difficult to reuse. It is therefore recom-
mendable to integrate recycling considerations into research projects dealing with
light weight construction, just as for multi-material processing.

Regarding new materials, as one of the interviewees pointed out, there are several
possibilities for weight reduction that have not even been investigated by now be-
cause of high costs. For example, titanium has a high potential as a light weight
material but is much too expensive at the moment. Another promising material that
is considered for automotive applications only in very pre-application projects is
carbon composite, which is expected to bring weight reductions up to 40%.16

Laser
The necessity to use plastics, hybrids and composites has brought about a variety of
new processes. A key technology for processing light weight materials is laser
processing. Laser welding has revolutionised the manufacturing of cars as several
materials can be welded with a high degree of safety and exactness. The application
of laser welding in serial manufacturing is rising at the moment and is expected to
be further expanding according to literature as well as by several of the experts in-
terviewed.17 While laser welding and cutting of conventional blank sheets and laser
cracking of motor parts are already widely implemented, the processing of innova-
tive materials like foamed metals is currently under way. Application of laser tech-
nology to plastics and composites as well as to several alloy metals and hardened
materials is heavily investigated at the moment and even processing of copper for
electronics applications is considered. For example, regarding plastics, VW is using
laser welding robots for cutting covering plastics. Automotive suppliers are in-
creasingly using laser welding for plastic housings (e.g. of electronic components).
Furthermore, laser soldering and laser welding for micro applications like sensors
are being tested.

For all these advanced applications, process control and quality control are key is-
sues. Digital image processing is essential for testing welding seam quality.18 Sen-
sors are of high importance to enable such control concepts as a variety of parame-
ters have to be surveyed with a high degree of exactness. Furthermore, new kinds of
laser sources have to be investigated to allow further applications.

16 The EU project “Tecabs” (Technologies for carbon fibre reinforced, modular, automotive struc-
tures) which is co-ordinated by Volkswagen is dealing with this issue.
17 E.g. the new Audi A2 has 30m laser weld seams
18 cf. ( 2001)


15

Which of these technologies do you think have the potential for disruptive changes for your indus-
try?
“Laser technology for joining materials. To some extent it is available already today, but it is very
expensive. This will develop in the future and will result in decreased usage of material since with
this technology, two materials (or pieces of materials) can be joined lying next to each other without
overlap (which is the case with today’s joining technologies).”
(Automotive systems supplier)

Apart from the mentioned positive aspects on safety, laser technology is also ad-
vantageous for high degrees of automation (see below) and supports process inte-
gration. Furthermore, it is extremely fast and flexible. Because no tools are needed,
there is no wear out. Laser technology therefore seems to be a key process for com-
petitiveness of manufacturing of personal cars in Europe.

“Lightweight construction is driven by the need for highly automated production at
high wage locations” (OEM manufacturing planner)

As one expert mentioned, not all manufacturing processes are equally easy to auto-
mate and therefore suitable for production in high-wage locations (see also strate-
gies section). Therefore, choice of materials which go along with certain processes
has an impact not only on the nature of the jobs in car manufacturing but also on the
location of these jobs. The expert thought the application of highly automated light
weight manufacturing essential for the survival of European car manufacturing.

Conclusions
In summary it can be concluded that there is a multitude of trends in light weight
construction and that some developments are heading in different directions. At the
moment, it can not be foreseen in which state light weight construction in car manu-
facturing will stabilise. Nevertheless, it is clear that the direction of change will
have major impacts in the following areas:
• car manufacturing processes and therefore on the opportunities for machine tool
manufacturers and automotive suppliers
• recycling possibilities and environmental burden
• employment issues

Accordingly, there is an urgent need for innovative concepts for light weight design
and manufacturing that takes into account the whole vehicle life cycle including
manufacturing. Therefore, in the interest of competitiveness and sustainability, it is
highly recommendable to investigate this area more closely. The high degree of
uncertainty at present about life cycle developments at the same time makes it pos-
sible to actually affect developments in this area. For example, it might be worth-
while to invest into one of the more far reaching alternatives instead of risking a


16

lock in into half-way solutions. At the same time, some solutions that seem to be
very advanced with respect to weight reduction might lead to outsourcing of manu-
facturing operations or bring up new recycling problems.

4.1.3 Possible Adoption of Nanotechnologies

In the materials and transformation processes strand reports, future applications of
nano-science were discussed in detail. Several of the applications named there are
of relevance in the automotive industry.

As sensor technologies are considered to be of high importance for the cars them-
selves as well as for manufacturing processes19, nanotechnologies that enable
smaller sensors with higher sensitivity would allow for major progresses in the
automotive sector. Example of applications mentioned by the experts were how
sensors could be used to tell the driver when he comes too close to the car in front
of him and when to brake or not etc.

Other impacts are expected with nano-powders20 that help to improve powder-
metallurgy methods. This would certainly have an effect on the industry since pow-
der-metallurgy is widely expected to be increasingly used in car manufacturing.
Nevertheless, is has to be diligently considered if or how nanopowders can be recy-
cled. If this issue can not be solved, these methods are not likely to be taken up in
the automotive sector since there is a strong pressure to recycle large parts of old
cars (see section 6.1.2).

In the interviews, the main issue raised in connection with nano-technology was
coating and painting. The majority of the automotive experts that were interviewed
expected applications of nanotechnology in car manufacturing in the time period up
to 2020 in this area.

New coatings for chassis and body as well as for other parts, which would result in
harder and stronger material would at the same time allow for thinner materials and,
thus, lighter cars.

There is a major effort of car manufacturers to replace current coating methods to
reduce VOC emissions (see all environmental reports listed). Several car manufac-
turers have developed alternatives to classical painting methods, but most of them
are still difficult to apply universally. Therefore, the use of nano-coatings, espe-

19 This was pointed out especially in the strand report transformation processes.
20 A detailed explanation of nano powders can be found in the strand report materials Annex I


17

cially for plastics, is highly interesting. Furthermore, nano-coatings are expected to
bring new improved surface quality and to add interesting features to the surfaces.

Examples for this are:
• Dirt repellent coatings for lights and window screens
• Self cleaning coatings
• Shining foils
• Tire coatings improving adhesion

Moreover, with nano-coatings used to improve tooling, as was suggested in the
strand report for transformation processes, this will be of high importance to the
automotive sector due to the fact that new tools are needed to meet the increasing
demands on fast processing of different materials. New tool coatings would be even
more interesting – due to cost considerations as well as to environmental concerns -
if coolants or lubricants can be avoided or reduced through their use.

4.1.4 Manufacturing and Emerging New Concepts in the Power
Train

The car industry’s answer to the request of making the transport system more sus-
tainable is not least the development of new propulsion systems. There are several
directions taken, from the incremental innovation of the traditional combustion en-
gines via the use of alternative fuels like natural gas and synthetic as well as renew-
able fuel up to electrical power using hybrid concepts. The most radical and in-
creasingly probable change is the use of fuel cells. Therefore, in the following,
changes and challenges connected with this innovation are elaborated.

The fuel cell implies considerable technical changes throughout the sector and this
will also have far-reaching impacts on the related equipment producing industries
concerned with the motor and its periphery (cf. Wengel/Schirrmeister 2000). The
drive train and motor accounts for around one third of the value of a car. Demand
will tend to shift away from mechanical parts such as crankshafts, cylinders and
pistons, towards process-technical and electro-technical components such as electri-
cal motors or gas generating equipment. There will thus be completely new manu-
facturing processes for car engines. An important question is how the traditional
innovation partnerships between automotive companies and machine tool manu-
facturers will react to that challenge. These co-operations mark a leading edge of
machine tool innovations and are also a stronghold of European manufacturing
sectors.


18

The changes in components will have an effect on the production methods used
(figure 5.1.3-1). Particularly those production methods required in the combustion
engine (because of strain due to temperature and rotation, such as die casting,
grinding and honing), will only be necessary to a smaller extent in fuel cell drive
systems. Other technologies will grow in importance, for example, punching could
be used in the production of the stacks for the fuel cell and the gas production unit.

Figure 5.1.3-1: Changes in Manufacturing Technologies Due to Fuel Cell Tech-
nology

Decreasing importance Increasing importance
Much less mechanically stressed or rotating More identical parts to be mounted, and
drive and transmission components: exposed to chemical stress:
• die forming, • chemical coating, printing,
• tension arm annealing, • catalytic coating,
• hardening, • stacking, clipping
• smooth rolling, • high temperature soldering, adhesion,
• grinding, • deep drawing,
• honing • bending,
become less important • stamping
become more important

In the case of vehicle electric parts suppliers and their outfitters, we will see, for
example, how although the starter and dynamo will be omitted, electric motors for
driving the compressor, cooling and metering pumps as well as the reluctance motor
will be required. Technologically considered, these are similar components. For the
outfitter, this means that he will not have to provide any fundamentally new manu-
facturing technology to the supplier in order to remain part of the innovation proc-
ess. Outfitters for suppliers who produce conventional components which are to be
adapted do not have to fear any technological innovation leap since their buyers will
not be confronted with this either. However, quantitative adaptations may take place
due to the need for either extensive outfitting investment in, for example, the larger
cooling system, or less extensive investments, which is to be expected for the sim-
pler construction of the transmission (fewer gears).

Many automobile manufacturers are engaged at present in very intensive develop-
ments of fuel cells. They however follow different strategies (see figure 5.1.3-2).
While some go for a largely internal development of the technology (e.g. Toyota,
GM) others co-operate with specialised companies (e.g. DaimlerChrysler/Ford and
Ballard). Some are more reluctant (VW), others concentrate on the application as
auxiliary power unit, APU (BMW). In parallel, joint research is performed in dif-
ferent consortia including universities and specialised research labs on regional,


19

national and European level in order to solve remaining technological problems.
Many suppliers engage in fuel cell related R&D as well. In many cases this is to
make up for anticipated losses in their traditional markets around the combustion
engine, but there are also completely new players.

Figure 5.1.3-2: Fuel Cell Strategies and Co-operations in Automotive Industry

Close cooperation
but each own Cooperation, shares
stack development French Ballard, Ecostar, Xcellsis
research initiative Car production at Ford
33% share in Mazda

Toyota Hyundai PSA Renault Volvo Ford Mazda EvoBus FIAT

GM/Opel BMW MAN VW DC Mitsubishi Nissan Honda Rover

IFC Delphi De Nora Siemens Ballard Plug Power

Cooperation/involvement
own stack development Celanese
individual stacks delivered
fixed supply contracts

Source: Marscheider-Weidemann 2002

Depending on the make-or-buy decisions of the car companies and the necessary
economies of scale, particularly in the early phase of diffusion, production will be
concentrated either close to the lead market, which could well be California or in
the country of competence, which could be Canada where Ballard has already built
up relatively large manufacturing capacities. Even though the diffusion will be
slow, there is a considerable loss of markets for traditional automotive parts on the
horizon.

Figure 5.1.3-3: Challenges of the Fuel Cell to a Fragmented Innovation System

R&D
– New materials
– Contro /sensor technologies
– System integration
– Simulation
– ...

Manufacturing
Use
– New manufacturing technologies
– Infrastructure development
– Re-organisation of supply chain
(repair and maintenance , fuel supply ,...)
(re-definition of core competencies
and division of work ?) – New car concepts and distribution
(car as powerstation , leasing ,...)
– Integration/ co-evolution of sectors
(e.g.: energy equipment and cars )


20

There are experts who consider the fuel cell as the micro-chip of the 21st century. It
certainly is a very promising energy converter and a system innovation, which
poses strong challenges to the fragmented European system. In order to achieve the
cost targets and to minimise application barriers, the innovation process to the fuel
cell requires parallel break-throughs in fields like: manufacturing (technological as
well as organisational, possibly virtual factories); research and development (par-
ticularly materials (see also CMI materials strand report) and system integration)
and infrastructure (not only fuel cell but also maintenance skills and innovative
sales and car concepts). It will continue to be difficult for quite some time to reach
satisfactory manufacturing batches. Other applications will most likely be commer-
cialised before the automotive application. Consequently, integrated policy ap-
proaches on different levels, involving different fields and using different instru-
ments are necessary. This is particularly true as the full environmental benefits only
will occur if the whole fuel chain up to the final provision of hydrogen is strongly
based on renewable and clean sources (cf. Weiss et al. 2000).

4.1.5 Manufacturing and Electronics in Personal Cars

Hard facts show how important electronics is for the car industry, for performance
and cost. For example, in 1995, the world-wide automotive electronics industry was
growing faster than telecommunications. In 2000, 20 million cars were produced in
Western Europe, each containing on average five to six electronic systems worth
several hundred Euros. It is suggested by the UK Forecast that the number and
value of automotive electronic system will grow at 10% p.a., so that early in this
century, electronic systems will account for at least 15 % of the vehicle value.21
The use of semiconductors and sensors is expected to grow dramatically. Moreover,
the future will see more business links between the automotive and telecom indus-
tries to offer in-vehicle communication services. The car is becoming an integral
part of these emerging services, which can give access to individual traffic and
navigation information, breakdown assistance and automatic emergency calls and
traffic control to avoid congestion (and thereby decreasing fuel consumption and
lowering emissions).

Telematic systems and x-by wire22 concepts are named as major drivers for the
increasing use of electronic components in cars.23 Furthermore, the advent of the

21 See also (Mercer und HypoVereinsbank, 2001c) where it is forecasted that in 10 years the market
volume of electronic components in car manufacturing will have grown by 115%. (13-5)
22 x-by wire is used as an umbrella term for concepts were mechanical systems in personal cars are
replaced by electronic ones. This embraces drive-by-wire, brake-by-wire and steer-by-wire
23 For a view from the German Association of car manufacturers (VDA) on telematics see for ex-
ample (Verband der Automobilindustrie: AUTO Jahresbericht 2001, p.108, 111, 113). An ac-


21

fuel cell is expected to bring a further push for electronic systems in the car.24 In
addition, the increasing use of cars as “office” is fostering the integration of elec-
tronic devices into the car’s interior.

From the results of the automotive scenario working groups, it becomes very clear
that electronic systems in personal cars might evolve on very different trajectories
depending on the development of the socio-economic background. For example, it
can be expected that there will be very sophisticated IT systems in the car to enable
multi-modality when public and private sector work together effectively. Differ-
ently, in more fragmented and individualistic futures, electronic components will
serve to add features to cars that enable their owners to differentiate themselves. It
can thus be concluded that the share of electronics in cars will be rising regardless
of how the specific applications will look like. This means that the ability to deal
with electronic components in personal cars will become ever more important in the
future.

“the car like one big computer ... ” (contract manufacturer)

At the moment, manufacturing of electronic components is posing several techno-
logical challenges as well as organisational problems to companies in the automo-
tive sector. It is still unclear whether there will be a major effort by automotive
companies to take on electronic production as a new core competency (see also
strategies section). Considering the multitude of issues and applications, it is to be
excepted that, if such an effort is made by European car manufacturers, this will be
a major push for electronics manufacturing in Europe, which, at the moment, is not
very strong.25

The following technological issues are raised by literature and interviewees (for the
organisational challenges see section 5.4):
• Integrating electronics in the car almost always means thinking in mechatronics
systems since, in the end, there are always mechanical components involved.26
Accordingly, mechatronics is considered as extremely important for car design
and manufacturing. It is mentioned how mechatronics poses high demands on
interdisciplinary thinking and communication abilities (see section 4.3).

count of the European perspective can be found in the IPTS Futures technology map, p. 50 and
58
24 cf. Marscheider-Weidemann et al., 2002 and Wengel and Schirrmeister, 2000
25 This consideration is further elaborated in section 5
26 Mechatronics is mainly understood rather as a concept than a specific technology. The main
feature of the concept being to think of electronic mechanic and other (pneumatic, hydraulic,
magnetic etc.) components as an integrated system instead of a coupling of components


22

• Manufacturing of electronic components is changing classical patterns of car
manufacturing. For example, the need for clean room production poses difficul-
ties for today’s car manufacturers.
• Standards are a major problem for the development of electronic components
and in this respect. Systems integration is the main future challenge.
• Simultaneous development of hardware and software is highly problematic.
There is still no general quality standard for software systems in car manufac-
turing.
• There is a trend towards integrating electronic components directly into plastic
parts of the car like instrument panels (“molded interconnect devices”).27 The
use of flexible interconnects might save manufacturing steps and soldering
points. However, this needs new repair concepts on the OEM side. The impact
on recycling is still unclear.
• With electronic components increasingly used close to the motor block, there
will be a need for high temperature electronics, which will require other materi-
als than silicon.
• Failure of electronic components is becoming a major reason for car break-
downs. Repair concepts therefore have to be adapted to the increased use of
electronics.
• Small scale manufacturing of electronic components might be a way to establish
electronics as a competency of automotive manufacturers (OEMs and system
suppliers).

“Sure, OEMs would like to do electronics by themselves. It’s just that their quality control is much to
bad and their software standards are much to confused to do this.” (Electronic systems supplier)

4.2 Technological Developments Driven by Demand on Flexi-
bility and Speed

The automotive industry is under pressure to perform extremely fast and in a flexi-
ble way. Both factors are driven, on the one hand, by an increasing demand of indi-
vidual cars for special purposes and, on the other hand, by tightening competition
on globalised markets. Lead times and product life cycles have become significantly
shorter. Hence, flexibility as well as speed requirements are widely perceived as the
major current and future drivers of automotive manufacturing. The automotive in-
dustry in Europe is struggling to fulfil these demands. Several companies are en-
countering severe problems in combining quality and speed requirements. The

27 cf. 2002b


23

technological trends emerging from this struggle will be discussed in the following
section (for the organisational strategies dealing with these issues see section 5).

“There are normally 1-2 years between the client’s request to the actual deliver. This time span has
continuously shortened since the car manufacturers decide as late as possible but keep the starting
date for assembling the car (we get sort of squeezed in between which again calls for standardised
solutions).”(producer of assembly lines and other equipment for automotive OEMs)

It should be noted that short life cycles of cars, rising multitude of variants as well
as short development times are by no means “natural laws”. They are the result of a
certain way of globalised manufacturing and use of cars, which may not be the most
sustainable choices. This section can therefore be interpreted in two directions. On
the one hand, measures can be taken to help the European automotive industry to
meet the demands of globalised manufacturing in its current face. On the other
hand, it can be attempted to change the political background to strengthen other
forms of globalisation.

This twofold perspective is also present in the results of the automotive working
group at the scenario workshops. The working group expects flexibility demands to
be further rising if the socio-economic background leads to an increasing emphasis
on individual values. This goes along with an emphasis on modular production.
Nevertheless, the number of variants is expected to increase even when there will be
a high degree of collective values. Regarding speed, the focus in this case is more
on updating of existing mobility solutions than on fast exchange of cars. Demands
on flexibility and speed are dealt with through multi-local organisational solutions
combined with sophisticated technological applications.

4.2.1 Processes

The increasing need for speed in production is enforcing an integration of proc-
esses. It is sought to reduce the amount of manufacturing steps and to apply proc-
esses that do not need specialised tools, but can be adapted to different functions by
programming. The whole manufacturing chain is radically changing to achieve
these aims. While OEMs are most concerned with time to market and fast ramp up,
suppliers need to adapt to fast changing demands of OEMs and contract manufac-
turers. The latter, which are manufacturing for different OEMs, again have very
special flexibility needs.

A clear „winner“ in the competition of fast and flexible processes is laser technol-
ogy which is extremely fast and flexible and can be highly automated. Accordingly,
laser processes are increasingly used (also because of their suitability for many dif-
ferent materials (see above)). Hydroforming and pressing with high forces are also
expected to gain importance as they reduce the number of manufacturing steps.


24

Another trend being pushed by the need for process integration is the near-net shape
processing. Near net shape processes have been considered as one of the two most
important cross cutting issues for research priorities by the automotive working
group at the FutMan scenario workshops. This is very much in line with the results
of the interview analysis. It is sought to use casting processes to get very near the
final form with only the minimum of finishing operations. Powder-metallurgy proc-
esses like sintering are expected to become even more refined and to rise in impor-
tance in the future.28 These kinds of processes can be combined with rapid manu-
facturing concepts. From an environmental point of view, this is also interesting as
material and energy can be saved. However, some powders might be difficult to
recycle. It was mentioned how these processes easily can be adapted to concepts of
regional localised production.

For all these new processes, it is, again, simulation and modelling that are enabling
progress. However, a better understanding of the processes involved is needed to
optimise their performance via simulation.29

“Major topic for research on a European level: Simulation of forming processes especially bending
e.g. of magnesium. Actors from software suppliers as well as manufacturers have to be in-
volved.”(automotive OEM)

However, it is not just processes alone that are enabling flexible and fast manufac-
turing of cars. At least as important are innovative concepts of manufacturing or-
ganisation that are implemented at car manufacturers to realise mass customisation.
The main concepts under way are modularization and platform concepts (see sec-
tion 5).

4.2.2 ICT Technologies in Manufacturing

To integrate the high level of process optimisation and control with advanced con-
cepts of manufacturing organisation, innovative planning methods are needed.
Therefore, the automotive industry has widely adopted approaches for using virtual
reality for planning of manufacturing. The method of „Digital Mock Up“ that was
developed from 3D CAD has been long adopted by the industry. At the moment, it
is sought to integrate all levels of simulation to a „digital factory“. Though this ex-
pression is very often used nowadays, the realisation of the concepts will be posing
research problems until 2020 at least. At the moment, there is a multitude of prob-
lems in integrating even low levels of factory planning. Furthermore, it seems that

28 For a detailed description of near net shape processes see CMI strand report especially Annex I
29 see CMI strand report Annex I „intelligent processing“ for details


25

engineers do not always easily take up these technologies as an aiding tool but pro-
ceed on their usual way of planning.

“VR is encountering the same problem as CAD did at its first introduction: In the beginning the pen
is always faster” (automotive OEM)

As the digital factory is embracing all sorts of human knowledge and human activi-
ties, several aspects of social sustainability are encountered. To realise a sustainable
kind of knowledge production it is highly important to integrate different kinds of
knowledge into modelling procedures in a participant approach.30 Funding should
try to strengthen this point of simulation research. Car manufacturers offer an ideal
starting point for such interdisciplinary simulation efforts mainly due to two rea-
sons. On the one hand, technologies aiding virtual manufacturing are relatively
widespread in the automotive sector and, on the other hand, there is a tradition of
advanced and participant approaches on organisation of work.

4.2.3 Diffusion of Existing Technologies

In the strand report “transformation processes”, the difference between first R&D
success in manufacturing processes and the widespread application of these proc-
esses especially in SMEs was emphasised. It has been shown how different manu-
facturing technologies are adopted by companies at different speed. In the automo-
tive sector where there is an enormous span in sizes of companies along the value
chain this is especially important to keep in mind. Asynchronies in technological
advances between suppliers and OEMs will cause decreases in competitiveness for
the whole demand and supply chain. Therefore, “diffusion” should be considered as
a major aspect in research projects dealing with manufacturing processes in the
automotive sector.

Regarding diffusion, it is important to realise that this does not only mean applica-
tion of already developed concepts. It has to be acknowledged that, in the course of
its application in different contexts of manufacturing as well as in companies with
different organisational needs, the processes are continually reshaped. This adapta-
tion to special needs is vital for successful diffusion with a positive influence on
competitiveness. Therefore, even when research is envisaged with a time perspec-
tive of 2020, the continuous further development of existing technologies should
not be neglected. Especially with the aim to foster sustainable manufacturing solu-
tions, there is a high potential in the adjustment of existing clean technologies to the
demands of different applications and to promote their quick diffusion also to

30 This aspect has also been stressed in the strand report transformation processes, where simulation
turned out to be one of the most important enablers for future manufacturing processes.


26

SMEs. The competitiveness of the whole European automotive sector is depending
on successful diffusion of advanced manufacturing concepts.
Examples for technologies that are already developed but where a high potential is
still to be expected by further diffusion and adjustment are:
• advanced automation concepts,
• teleservice,
• man-machine interfaces,
• dry processing,
• laser-technologies.

4.3 Skills and Competencies

The technology trends that were described are influencing changes in the demands
on skills and competencies. It is obvious that the increasing need for simultaneous
optimisation of materials and processes is leading to an increasing demand on the
ability of interdisciplinary teamwork and communication skills.31 This holds for
staff at every position in the manufacturing enterprise but especially for R&D per-
sonnel. For several reasons this is even more urgent in the automotive sector than in
other industries. Because many production steps are done by specialised companies
there is a high necessity to communicate between experts from OEMs and suppliers
at different levels. The increasing amount of electronic components in cars (see
above) is demanding an integration of electronics and other design issues. Software
concepts have to be integrated and adapted to the hardware needs.

New design tools that help to integrate new concepts like virtual reality for factory
planning have to be understood and used. With the increasing need for modelling to
realise advanced process control and high levels of automation, the importance of
basic sciences in manufacturing is widely expected to rise.

From this multitude of new requirements, it follows that, for the product design as
well as for process planning in automotive manufacturing, people being able to in-
tegrate several technological “worlds” are needed. There are different views as to
whether teams of specialists being able to communicate with each other or promo-
tion of generalists will be the right solution.

31 The automotive working group considers new interdisciplinary skill requirements being a robust
trend in the future.


27

“scarcity of people with the right knowledge in software could delay the virtual factory, which we
are awaiting” (automotive OEM)

Several interviewees pointed out that mechatronics which integrates several of these
aspects is rather a way of thinking than a specific technology and that the “mecha-
tronics philosophy” needs to be taken up by designers to a larger extent.

On the workers level, the handling of electronic components (in automated manu-
facturing systems as well as in the cars themselves) will require several new skills
and competencies. IT knowledge will become still more important and should there-
fore be integrated in professional education.

It seems that at the moment the automotive industry is struggling with these prob-
lems on both levels.

“Operators need increasingly more training. The engineers have to use simulation programs using
3D. In general, multidisciplinarity will be important.”
(supplier of assembly lines to automotive OEMs)

Some studies mention that qualification planning should be done with a longer per-
spective and Foresight activities should be evaluated early with respect to their im-
plications for qualification requirements.

Finally, several interviewees expressed how a high level of basic knowledge will
become necessary for all personnel in the automotive industry. Furthermore, it is
thought that the ability to solve problems will become more important than a high
amount of stored knowledge. It was repeatedly stated that flexible manufacturing
processes need intelligent interfaces between man and machine, which means
highly developed man machine interfaces on the one side and highly competent
humans on the other.

“Combining knowledge of different areas is essential to handle multi-material design, teams of spe-
cialists are required, communication skills across expertise are important, international thinking is
crucial.” (automotive OEM)

“Humans should be kept out of manufacturing wherever possible to avoid mistakes.” (automotive
system supplier)


28

4.4 Summary: Technological Items for the Research and
Policy Agenda

“The one litre car is possible even now, but research costs are so high that the car will be much too
expensive to be sold. Car manufacturers are not able to finance such projects though they can be
used to learn from for current developments. In the future, situations like this where there is a gap
between what can be done and what is done will become even more common” (automotive OEM)

In the following section, several technology topics will be listed that were derived
as possible issues for research that would help to ensure competitiveness of Euro-
pean car manufacturing. It is obvious that the automotive industry will take up most
of these research topics without public R&D funding. Nevertheless, as becomes
clear from the above citation, car manufacturers, for obvious reasons, will not go
very much beyond what is regarded necessary from an economic and market point
of view on their own. Furthermore, sustainability criteria will not be integrated in
these research projects as much as they could be.

As the directions of many developments are still unclear and a large diversity of
concepts is emerging, it seems reasonable to employ highly targeted funding strate-
gies to bring sustainability issues into all the research topics that are important in
the sector at the moment instead of focussing on particular technologies. Hopefully,
from such a multitude of approaches, a variety of customised sustainability solu-
tions adequate for different contexts will arise.

For the reasons named above, the list presented here should be seen as tentative.
Final conclusions should only be drawn in connection with the results from the fol-
lowing sections. In addition, it should be noted (as was discussed in more detail in
the strand report on transformation processes) that diffusion of technologies that are
currently established only in some companies might be well worth funding for rea-
sons of competitiveness and sustainability.

“Many of these technologies are already under way or even used by advanced large-scale manu-
facturers, but are still far from being applied by SMEs.” (Materials and Mechatronics expert from
research unit)

Interviewed experts from industry pointed out that funding should emphasise fast
and cheap applications. It was proposed to build pools of possible users for research
projects as well as joint projects between providers (e.g. of software or machine
tools companies together with users). It was mentioned how there might be resis-
tance to co-operate between competitors, but that such co-operations will be essen-
tial for European competitiveness.


29

In the following overview, areas of research topics that can be derived from the
trends described above are listed. Specific topics that were mentioned by the inter-
viewees are assigned to these groups. Possible sustainability concerns are also men-
tioned.
Design and manufacturing of light weight materials
• titanium extraction (lower price)
• joining technologies for different light weight materials with view to recycling /
re-manufacturing
• coloured plastics (alternatives to classical coatings)
Advanced manufacturing processes
• laser technology
• mechatronic
• rapid manufacturing, rapid tooling
• nanotechnology for coatings, sensors, and catalysts
• hydroforming (or other methods for varying material thickness (in the same
piece)
• soldering without lead (process control, quality assurance)
• manufacturing of multi-material components (with an integrated assessment of
sustainability concerns like recycling and emissions but also effect on working
conditions in manufacturing).
Near net shape processes
• powder-metallurgy, sintering (especially application oriented, view to recycling
important)
• rapid manufacturing
• closed mould injection processes (aid small companies)
Process simulation
• simulation of new materials as well as simulation of the interface between tools
and materials
• simulation of forming processes especially bending e.g. of magnesium. Actors
from software suppliers as well as manufacturers have to be involved
Planning and control of manufacturing processes
• methods for recycling environmentally friendly product and the process design
needed in order to produce them
• integrated automation concepts
• control technologies with adequate sensors (especially for welding and bending)


30

• standards for electronic systems as well as for software and control systems
• man-machine interfaces
• virtual reality for planning of manufacturing (with a view to social sustainability
aspects)
• simulation and expert systems to aid quality control in electronic systems pro-
duction (reliability-simulation), especially for soldering. Possible research con-
stellation: European user and provider companies in soldering. This project
would especially aid soldering without lead.


31

5 Production Strategies

The companies in the automotive industry follow different strategies in order to
cope with developments in their environment including markets, competitors,
regulation, shifts in values, economic cycles, societal demand, factor cost and avail-
ability. Quite contrary to the situation a few years ago with „lean production“, there
does not seem to be „one best way“ how to organise the production of cars. At the
same time, strategies are not only a (re-active) answer to the outside world. They
are also to a great extent original solutions taking into account enabling technolo-
gies and ideas or progress in relevant sciences thus incorporating technological as
well as organisational, managerial, or qualification measures. The main (future)
demands realised by the automotive experts we talked to do not surprise: increased
flexibility, growing individualism, speedy innovation, continuous cost reduction.
However, some issues should be noted that are not so generally referred to: better
reliability/quality, extended functionality, improved sustainability. These issues are
rather considered as (current) problems than as (future) trends or requirements and
may thus be underestimated in their relevance as drivers.

In the recent past, a number of trends in the automotive industry have been obvious,
namely a sharp decrease with respect to the number of independent OEMs and the
opposite trend with respect to brands and car models. However, it is far from clear
whether this will continue. This is also true for the share of work between OEMs
and suppliers. In the last years, the vertical range of manufacture has dropped with
OEMs quite significantly from 23 to 30 % while the supply volume has quadrupled.
In this context, new forms and frontiers of competition arise or are already to be
observed. Besides the horizontal competition between suppliers for a certain part (or
system),
• manufacturing departments of the OEMs compete with suppliers,
• decisions on the vertical division of work within a supply chain become less ob-
vious, and
• tasks shift between the production and the service sector in both directions.

In the interviews with automotive experts the project team tried to identify typical
general as well as individual strategies in the sector. This was only partly successful
for two reasons. Those familiar with company specific strategies were often reluc-
tant to disclose them. Others, addressed as technical experts, hesitated to talk about
such aspects in more than a fairly general way. Given this background, in this
chapter, which discusses several issues including supply chain management, new
organisational concepts, e-commerce, globalisation, clusters, mass customisation
etc. , we refer to existing studies to add to the results from the interviews.


32

5.1 Restructuring the Value Chain: Options for Different Ac-
tors

The OEM as a brand owner reduced to core competencies such as design, market-
ing, and (possibly) system integration (PricewaterhouseCoopers, 2000) constitutes
the one end of the spectrum of possible futures of the automotive industry. The (re-
)integration of sales, design, manufacturing, re-manufacturing and recycling with
OEMs could be the other end. The decreasing vertical range of manufacture with
OEMs, the growth of contract manufacturing by specialised companies/assemblers
(like Valmet or Magna), or the increasing responsibility of suppliers – and engi-
neering firms – for technological innovation seem to support the first vision.32
However, there are some indications of a shift back towards the latter. Some OEMs
seem to be re-thinking their core competencies and others are aiming at building-up
or maintaining production/process knowledge by increased R&D for example.

Another dimension of the restructuring is the geographical allocation of the supply
chain. Again, the spectrum is broad and ranges from local clusters („supplier
parks“) to global sourcing concepts („world-wide trade of parts“ VDA, p. 53). Di-
verse concepts such as “manufacturing close to the market” or “centralisation in
order to achieve economies of scale” are emerging in parallel. The respective size
and integration of the sites belong here as well. Several new and specific plant con-
cepts such as the „gläserne Manufaktur“ (transparent craft factory) of Volkswagen
in Dresden, Germany, or the SMART manufacturing consortium in Hambach,
France, have been developed. Green field sites with comprehensive compensatory
ecological measures (e.g. Rastatt factory of DC in Germany) exist beside ambitious
attempts of “sustainable factory renewal” (e.g. Rouge factory of Ford in USA). Es-
pecially where space is disposable, condominia of OEM and suppliers are tested
(e.g. Skoda).

Consequently, there are different types of supply chains and supplier roles. The
suppliers respectively need and have different competencies. Although a further
segmentation and specialisation of the value chain is expected along dimensions
like innovation and cost, application and process, or niche and volume33 a large
variety of successful strategies may still be performed. Even if the predicted con-
centration of the automotive suppliers (e.g. Mercer/HypoVereinsbank, 2001: “the
top 20 will share 50 % of the volume in 2010 against 27 % today and only 3500 of
5500 companies will survive”) is realised there is room and need for different busi-
ness models (see figure 5.1-1). The diversity of company competencies and their

32 cf. VDA, AUTO Jahresbericht 2001; Nederlandse Vereniging Algemene Toelevering (NEVAT),
2002a, pp. 9, 13, 14; Mercer und HypoVereinsbank, 2001d; Jürgens, 2002
33 cf. for example: Jürgens 2002; Nederlandse Vereniging Algemene Toelevering (NEVAT), 2002b
p. 13 ff; Mercer/HypoVereinsbank 2001, p. 9 ff.


33

interlinkages – e.g. through the sharing of platforms – may actually be an important
success factor for the automotive industry in Europe to achieve both innovation and
productivity. Thus suppliers become an important driver for innovation.

“Instead of waiting for the OEM’s demands it is important to initiate own innova-
tions.” (component supplier)

Figure 5.1-1: Supplier Strategies

⊕

component
specia- Module/
list
⊕ Supplier of
system
specialist System
volumes
integrator

Niche
markets

⊕
Source: Mercer 2001

Jürgens (2002) suggests that there is a distinctive European approach how the inter-
action and specialisation between OEMs and suppliers is organised, using terms like
„new network approach“ (p. 32) or „emerging network structures“ (p. 36). He con-
cludes that this kind of concept dominated in the late 1990s and may lead in the
future to advantages over the „pyramid structure of hierarchical OEM-centred sup-
plier relations found in Japan“ (Jürgens, 2002 p. 36). The US automotive industry
with their OEM-owned but not OEM-centred mega suppliers seem to be in an in-
termediate position. But also in the European approach, the relationship between
supplier and OEM remains augmented with conflict.

“OEMs are on the one hand meddling with the processes of their electronic systems
suppliers on the other hand they are calling for them to take full responsibility”
(electronic systems supplier)


34

While the restructuring of the supply chain and related strategies are very much
discussed with respect to the future of car manufacturing other, more radical
changes which question the current product and production paradigm played a very
little role in the several strategic studies and in our interviews, too. They largely
seem to be limited to scientific and partly political debates under the heading „from
the automotive to a mobility industry“ (Volkert, 2002). Such new concepts would
very much concern the distribution chain and the relation to the customers: New co-
operations to better integrate different modes of transport would emerge. Finally,
instead of selling a car together with services a service (mobility) together with (the
use of) cars would be sold. This would certainly have consequences for the design
of cars (modularity, robustness, up-gradability, etc.) as well as for the design of
other modes of transport and the infrastructure, and in turn for the manufacturing
process (cf. expert group 2001 and their concept of sufficiency). Product and manu-
facturing technology may lose in importance for OEMs (Matthies and Heideloff,
2002, p.8). Already, they are increasingly concerned with improving their compe-
tencies in services, distribution, or aftersales support. They also face competition in
this respect. However, these activities are still either confined to small market parts
as car rental or meant to support traditional selling of cars. A shift towards „selling
customised mobility“ which could very much improve sustainability of the transport
sector and related industries is unlikely to emerge as a self-driven sector strategy
but would require favourable political and societal framework conditions as it has
become very clear from the results of the FutMan scenario workshops (see also
chapter 7).

5.2 Flexibility and Customisation: New Techno-
organisational Concepts in the Automotive Industry

Ten years ago, the Japanese model „lean production“ was the portfolio for organis-
ing manufacturing processes. Today it is obvious that there is more to being com-
petitive although many elements of the lean production concept have become stan-
dard means of organisation. Building on particular traditions of industrial relations
and participatory organisation, European firms have successfully gone even further
with respect to team work, designing holistic tasks, or increasing worker responsi-
bility (Jürgens 2002, p. 14 ff.). However, it seems that today the efforts for organ-
isational modernisation of the production in the automotive industry are slowing
down and steps back are even taken in some companies. The interviewees also
rarely referred to organisational modernisation in forms like „lean production“ as a
very relevant strategy. But the automotive industry still is at the forefront and as
figure 5.2.1 shows, has forced its suppliers to apply the concepts.


35

Figure 5.2-1: Use of Selected Organisational Concepts by Automotive Suppli-
ers Compared to Other Company Groups in Germany

70
%
automotive suppliers
60
suppliers to other sectors (only)

50 final producers (only)

40

30

20

10

0
mass customization process cost calculation simultaneous temporary development target costing
engineering teams

Source; Fraunhofer ISI manufacturing innovation survey 2001 (n=1630)

While the lean production concept – even in the European approach – focused pre-
dominantly on productivity and cost issues, today flexibility and the ability to cus-
tomise products are gaining importance. One of the major problems in this respect
is how to handle increasing complexity and how to ensure integration while main-
taining economies of scale and keeping capital lockup in manufacturing equipment
under control.

The most important and also common strategy in this respect is the use of platforms
and modularisation („construction kits“). This is done on different levels of the sup-
ply chain and with respect to the product as well as with respect to the manufactur-
ing equipment. Almost all interviewees underlined that these concepts are kept at
the back of everyone’s mind. However, there seem to be different approaches
among OEMs in Europe and in Japan of how to balance the reduction of complexity
on the one hand and the integration of the different modules and systems into one
working car on the other hand. While European companies rely increasingly on
networking with strong, independent suppliers, the Japanese tend to a more hierar-
chical system (Jürgens, 2002). While the first seems to have advantages with re-
spect to innovation the second may foster the reliability of the car as a whole.

Another means of reducing complexity and making the manufacturing process reli-
able and flexible could be the localisation of production in possibly smaller facto-
ries close to relevant markets. However, references to such philosophies were rather
made in the context of the vision chapter of our interview guide (see boxes) and in
the scenario workshops than with respect to actual strategies. But recent new fac-
tory projects show that this path is possible.


36

Vision for manufacturing of cars in 2020: “Small scale factories producing 5-10.000
cars/year. The space frame and other basic parts would come from suppliers closer to the
assembly factories. In the factories, components chosen by the customer are added.”
(Automotive OEM)

“An industrial system capable of producing;
• Hybrid cars with 2-3 litres/100 km combined cycle, interval depending on size of car.
• 4 months product development time for a new car model, achieved through “SMED” (a
technology in production achieving for single minute of dye) in product development
and automatic product development milieu.
• 2 year model market life cycle.
• Local/regional plants.
Digital industrial systems throughout from customer/market to supply chain.”
(Automotive sector Foresight expert)

Increasing flexibility is not only looked for with respect to product variants but with
respect to the volume or capacity of production, too. Therefore build-operate-own
or pay-on-production concepts have raised major awareness, not least as new credit
regimes (Basel II) may lead to new assessments of capital lock-in due to machinery
investments. However, the number of examples is still small, and equipment pro-
ducers are quite reluctant although product-service packages which lead in this di-
rection are more and more demanded. 34

“Service is very important. The customer expects them to be there for them naturally when-
ever they need it. They take a lot of things for granted which they do not pay for like train-
ing, design, support, further developments etc.”... (supplier of modules)

“Service is increasingly demanded from suppliers by the OEMs. Often the service
offer decides who gets the contract. Nevertheless, there is little willingness to pay
for service.” (electronic system supplier)

The integration or combination of the physical product with related services is not
only a phenomenon with complex equipment and machinery, but increasingly
reaches the car itself and many systems integrated in the car. The future obligation
to provide recycling facilities is one example, 24 hour service another. Conse-
quently, the organisation of these processes and their integration in existing com-
pany structures is on the agenda including the care for new skills needed.

Not only the latter points out the great importance of personnel development. Flexi-
bility and innovation set high standards for the qualification and management of the

34 Fords “pay on production” approach is mentioned as an example in several studies e.g. Jürgens,
2002, p 7. and Dudenhöffer 2001


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